San Jose scraps pension reform measure

San Jose scraps pension reform measure

san_jose_policeIn a remarkable move, the city of San Jose walked back its high-profile Measure B scheme to reform its costly public pensions commitments.

Striking a deal

Losing police to other jurisdictions, Mayor Sam Liccardo faced “enormous pressure to reach a settlement,” according to Scott Herald at the San Jose Mercury News. In fact, wrote Herald, Liccardo “could legitimately argue that the city had achieved concessions in negotiations, obtaining savings he estimated at $1.7 billion over 30 years. San Jose was able to save millions by foregoing the so-called ‘bonus checks’ to employees. And the city and its public safety unions agreed on a cheaper health plan.”

In an unusual move, the City Council successfully petitioned the courts to invalidate the measure, paving the way for a renegotiated deal with law enforcement. Under the terms of the new wage agreement, the Mercury News reported, police officers will receive “8 percent in ongoing raises and 5 percent one-time bonuses.” But the fate of the deal remained in the hands of voters, who would have to approve the Measure B replacement at the ballot box in 2016.

For now, however, the city has at least managed to settle its three-year court battle with police and firefighter unions, as San Jose Inside observed. And it stanches its law enforcement losses, which were approaching crisis proportions. “Since 2012, SJPD has had 265 officers resign and 167 retire,” according to San Jose Inside. “This year alone, the department has seen 41 resignations and 54 retirements, leaving the agency with 943 sworn officers out of a budgeted 1,109 positions.”

Taking it statewide

But former Democratic Mayor Chuck Reed, along with former Republican San Diego City Councilman Carl DeMaio, continue to back a controversial ballot initiative that threatens to complicate the issue of pension costs by offering California voters a new statewide approach.

According to its authors, the matter is cut and dry: “This simple initiative gives voters the ability to stop sweetheart and unsustainable pension deals that politicians concoct behind closed doors with government union bosses,” the two said in a joint statement, according to the Sacramento Bee. “That’s why the politicians and union bosses oppose this initiative – and why they continue to try to mislead the public on what the initiative does.”

But Attorney General Kamala Harris, one of the targets of their criticism, emphasized its potentially destabilizing consequences in her office’s title and description of the initiative. According to that language, the initiative “eliminates constitutional protections” for collective bargaining, bringing “significant” savings, but also costs, for state and local government.

“In addition to allowing voters to weigh in on public employee compensation,” the Bee summarized, “the initiative would mandate that voters approve any increases in pension benefits, sign off on new state and local employees being enrolled in the ‘defined-benefit’ plans that are now commonplace, and OK governments covering more than half of retirement costs.”

Trusting the voters

For activist opponents of the Reed-DeMaio plan, however, Harris should have portrayed the measure in an even less flattering light. By any measure, the scheme raises the prospect of fewer pension programs. “Requiring a vote by each government body to continue letting new employees into pension programs could very likely fail,” Reason noted, “requiring the state and municipalities to switch to 401(k)-style defined contribution retirement funds instead (which don’t require a vote).”

“This switch is important for spending reform because it takes governments (and taxpayers) off the hook for a guaranteed return. Governments would be providing all their contributions at the front end and would not be obligated to make up for any below-expected returns from these funds like they would with a pension.”

Analysts have not yet determined how great a departure from the status quo future votes might entail. “The effects on collective bargaining could be dramatic,” wrote Orange County columnist Teri Sforza. “And due to the less-generous retirement benefits that would likely emerge, governments would face pressure to increase other elements of compensation to attract and retain workers.” Like other measures that have passed through California’s initiative process, this one would put Golden Staters’ appreciation for direct democracy to the test.

16 comments

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  1. SkippingDog
    SkippingDog 20 August, 2015, 11:38

    The reality in San Jose is that the council finally realized that the Reed initiative is simply unworkable in that city. It fails to recognize the basic market forces driving police salaries and benefits, which is why it is being scrapped.

    Reply this comment
    • ricky65
      ricky65 21 August, 2015, 09:29

      Sorry, scooting dog. Market forces have absolutely nothing to do with ridiculous police and fire wages and pensions. If so, there wouldn’t be thousands of people applying for those jobs when they become available. In fact, true market forces should depress wages since so many eager applicants there’s no reason to raise wages. No doubt many would be willing to do these jobs, even for less if given the chance.
      The ‘forces’ you speak about are the artificial ones created by politicians pandering to the PE unions and handing over taxpayer cash in the form of raises and other perks to the unions. In return, the pols know they will receive lots of the same cash back in the form of campaign contributions from the unions.
      Its a truly symbiotic relationship where the philosophy is: “You scratch my back and I’ll scratch yours.”
      All to the detriment of the taxpayers who is left out of the equation and eventually is stuck with the underfunded pension bills and even higher taxes.

      Reply this comment
      • SkippingDog
        SkippingDog 21 August, 2015, 10:36

        If market forces weren’t in play, SJ would not have needed to provide retention bonuses, much less provide substantial bonus payments to those officers who agree to return after leaving for other departments.

        The number of overall applicants for police and fire positions is irrelevant, since the vast majority of those are quickly found to be unqualified due to lack of education, experience, or criminal acts and affiliations. 2-3% success rate for applicants is the norm, and many applicant groups are much thinner.

        Reply this comment
        • Inzidious
          Inzidious 28 August, 2015, 14:37

          Dude really? You honestly believe retention bonuses are necessary? I rarely post comments on these articles because it always comes down to two things really: You’re either a public sector worker and you think you deserve what you’re getting, or you’re not and it’s ridiculous.

          Everyone knows how impossible it is to get a government job in Cali. Everyone. Including all you existing govt workers who hire your siblings, cousins, etc etc. Nepotism is like 10 times hire in the public sector vs private. Hrmm I wonder why that is.

          Reply this comment
  2. NTHEOC
    NTHEOC 20 August, 2015, 14:35

    Oh I would love to see chuck reeds face right about now! Lol. This is also going to be another huge blow to his New reform initiative that is also set to fail. As if we didn’t have enough Ammo against him.

    Reply this comment
  3. desmond
    desmond 20 August, 2015, 18:15

    Why don t both of you post a picture giving the finger to millennials, their children, and so on? You can even wear your medals.

    Reply this comment
  4. Ted
    Ted 21 August, 2015, 09:45

    Problem with these measures of course is that they all contain clearly unlawful provisions and they drop the bottom out of the funds Zzzzzzzzzzzzzzzzzzzzz trying to fix what aint broken! lmao

    the ted system

    Reply this comment
  5. DavidfromLosGatos
    DavidfromLosGatos 21 August, 2015, 14:34

    In the meantime, the city is saving the $200K (or whatever the full cost of each “sworn officer” is) per year per vacancy. “943 sworn officers out of a budgeted 1,109 positions” = 166 vacancies. That is some big time savings to help offset the increases as they are slowly hired back.

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 22 August, 2015, 16:45

    Cop is a GED job, always has been, always will be.

    80% of the population could do it, if given the chance.

    Reply this comment
    • Ulysses Uhaul
      Ulysses Uhaul 22 August, 2015, 22:50

      97% of the residents can run a corn dog mustarding station at Poodle’s Adelanto truck stop employee location.

      Reply this comment
  7. desmond
    desmond 23 August, 2015, 15:05

    Has anyone talked to tourists from other countries? The perception is the cops here are paramilitary, corrupt, and too many are even a bit nuts. To all who defend, remember, it was politically smart to speak highly of the Stasi or SS in their day. It was also cowardly. Nice company our police keep.

    Reply this comment

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